A Thought Re: The Crude Oil Boom and Bust of 2008

The price of crude oil rose steadily all through the first half of 2008, hit a peak in July of that year, and headed down for the remainder of the year, right through the election.  Given the rest of the dramatic financial and political events of 2008, and given the general contemporary expectation that the price of oil is tied into everything, this quick spike in crude's price has naturally attracted a lot of attention and speculation. 

Here's a bit more.

In August 2007, voters in Turkey elected Abdullah Gül their new President.  Gül was the first devout Moslem ever to become president of modern Turkey – a country that since it came into existence in reaction to its Ottoman precursors has possessed a determinedly secular political culture.  Indeed, the law at this time prohibited women at universities from wearing of headscarves, for fear of its Islamic implications.  Gül, too, was surely a matter of concern to the world’s oil traders, both those with speculation and those with hedging on their minds. 

Those nasty oil speculators were as usual, following events, not making them.  Early in 2008, Turkey’s parliament passed a law allowing for such headscarves, and it should be noted that the first lady of Turkey, Hayrünnisa Gül, wears a headscarf.

I have impressions and opinions about everything, and of course would be perfectly happy to see women at any university anywhere free to wear whatever head gear pleases them individually.  But such feelings are utterly unhelpful in analysis.  The significance of the issue of the secular or non-secular character of Turkey for the stability of the whole region should not be underestimated.

So a reasonable account of what happened to the oil market in the U.S., and what role it played in the business cycle, might be this.  The market (in accord with what the efficient markets hypothesis we’ve discussed in earlier chapters might lead us to suspect) understood that the U.S. is heavily reliant upon imported oil.  The price of any commodity in an efficient marketplace is forward looking, and events in the Middle East led the market to anticipate further trouble and to build that trouble into its prices.  Those were supply side calculations, i.e. calculations about where the oil was coming from.

Any sign of Islamism in Turkey naturally drew the attention of these market, and this attention may have started that dramatic upward move.

But when the market price started heading down, in July 2008, was this also a supply side phenomenon?  Was the market saying either that sources of supply overseas had been successfully secured or that domestic sources were going to take up the slack?  I doubt either versions of that hypothesis.  No, the most reasonable hypothesis is that in July 2008 the oil market collectively saw that the United States, and with it the rest of the industrialized, oil-consuming world, was headed into a deep recession that would undermine the demand for crude oil and any of its derivatives.     

Time after Time

I'm back in town.

So, what should we talk about today? This: someone asked me recently, pretty much out of the blue, what I would list as the ten most important events in the world since 1993. I was allowed to interpret the word "important" any way I wanted to.

I composed a list. But I'm not going to share that with you until tomorrow. Today, I want to discuss the nature of such questions.

I can only understand such a question as an effort to predict which events will make it into the history books of our posterity, and how much text or emphasis each will receive there. Of course a phrase like "our posterity" is still vague, but we might just for fun pick the date 2107. What will a historian, writing then, regard as most important to know about the years 1993-2007?

I suspect that history will remain a matter of constructing narratives, and won't deteriorate into a mere data base. Narrative history responds to the human love of stories, of plots, and adds the assurance, "by the way, it really happened." Contrary narratives keep the blodd boiling and the word processing software upgrades selling.

Furthermore, I'm going to indulge for now in the supposition that anarchists aren't going to prevail in the world any time soon, and that the central narrative of history books written in 2107 will continue to involve sovereignty. Various governments claiming sovereignty over various chunks of the earth, and their clashes with rebels who deny that authority as well as with foes from outside their chunk. History will continue to be largely (though it won't of course be entirely) a matter of past politics, past military actions, past diplomacy.

Other sorts of history (the stories of technical inventions, of commerce and finance, of everyday life) will continue to make contributions, but developments in each will be perceived as "important" to the extent that they feed into the central narrative of sovereigns, rebels, and foes.

To illustrate, here are ten events from the period 1842-1856.

We'll start with international war and diplomacy:

1. The Anglo-Chinese, or Opium, Wars.
2. A wave of revolutions, 1848-49, swept the occidental world from Brazil to Hungary.
3. November 1853, a battle between the Russian and Ottoman fleets ended in a clear victory for the former and began the Crimean War.

Now let's say something about the national politics (narrowly understood) of some of the leading powers of the day.
4. May 1846, the UK repealed its "corn laws," allowing the unimpeded importation of agricultural products. This became a key victory of free trade as a political/ideological platform.
5. December 1851, Louis Napoleon dissolved the National Assembly in France, effectively ending the life of the Second Republic.
6. 1855, the first legislature of the territory of Kansas in the US convened, and started enacting pro-slavery legislation.

What else? Well, let's try a bit of everything else.
7. 1844, in Illinois, religious leader Joseph Smith is murdered
8. 1845, the beginning of the potato famine in Ireland
9. 1848, the Seneca Falls Convention, in New York
10.1849, a Russian court sentences Fyodor Dostoyevsky, student activist/revolutionary, to death. (The sentence is later commuted, and the experience has enormous traumatic consequences for the budding artist.)

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This is a thoroughly objectionable list, surely. You might object for example that I've given scientific and technological achievement no place at all. Morse's telegraph, Siemens' improvements upon it, and the creation of the Siemens corporation in 1847, all have one might argue importance as great as that of anything I've listed.

Or what about the discovery of gold near Sacramento in 1848 and the subsequent rush of would-be prospectors?

And so it goes, on and on. At least in arguing about inclusion and exclusion we have the benefit of the practices of contemporary historians to work from. We aren't forced to speculate about the contents of texts still unwritten. Tomorrow then, we'll do just that. We'll return to the original question, most significant world events from 1993 to the present.